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Managing a Successful Transition to Outsourcing

Building a Strong Foundation for Outsourcing

Outsourcing, as a business process, has been recognized by industry experts as a viable and strategic tool for companies aiming to be globally competitive. However, governments have varying degrees of support for the outsourcing industry and public opinion is still divided on the merits of outsourcing. Due to the relative inexperience of client-companies and their outsourcing providers in ironing out an outsourcing agreement, many partnerships fall flat on their promises of cost savings.

Dr. Stephan Meixner, director at Technology Partners International, Inc. (TPI), shares five (5) critical factors in building a strong foundation for a successful outsourcing transition. US-based TPI is one of the world's leading outsourcing advisory firms.

He shares the following tips:

1. Draw support for a “burning platform”. When there is a financial crisis brewing within the company, the industry, or the economy, people are easier to rally towards change.

2. Lead the leaders in an alliance for change. When people are rallied towards change, the alliance must be organized and led. Those who need to be particularly convinced of the initiative for change are senior managers and, most importantly, the chief executive officer.

3. Accordingly adjust the rewards system for senior managers with the initiative. Shifting to an outsourcing system can be accelerated when the rewards system for the company leaders are integrated with the objectives of the transition.

4. Make senior management aware of the intricacies of outsourcing and its realities. Awareness of outsourcing's pros and cons among senior managers is important in having a successful transition. Sharing of notes and best practices among new and existing outsourcing initiatives can help in spreading outsourcing know-how. This contributes to better management of outsourcing challenges such as recruitment, methodologies, cultural barriers, etc.

5. Create a robust project plan. A plan must be robust enough to cover project status reports, timeline of deliverables and milestones, budget requirements, and the projected risks and benefits. As early as possible, all company operations must be engaged with the transition. A plan professionally implemented communicates to all stakeholders that all their combined efforts are needed for a successful transition.

In summary, Dr. Meixner writes that “a change programme is only as robust as the skills of the team managing the process.” It is thus important that both outsourcing parties - the client-company and the service provider - are fully aware of the risks and challenges of outsourcing.